175,000 buy to let properties have been empty for at least six months of 2017, according to new government figures.
Estimates indicate that landlords could be left at least £774 out of pocket each month their property remains empty, figures from deposit-free renting company Dlighted have revealed.
This indicates the full cost of owning an empty buy-to-let property can be nearly £10,000 a year.
Credit-rating giants Standards and Poors predict that half of buy to let investments will be loss-making by 2021.
A 100% council tax premium on empty properties was announced in November by the government. The average annual council tax for a band D property is currently £1,591 which is an additional cost of £133 each month.
If an investor owns a property with a buy to let mortgage on an averagely priced property with a standard 75-80% loan to value ratio then they could be re-paying £510 a month, figures from Homeowners Alliance show. Over a six month period, investors will have to pay £3,060 to keep up with their mortgage payments.
Vacant Property Insurance
A standard home insurance policy is often unlikely to provide cover if your property is unoccupied and a number of insurance companies state their policies are invalid if a property is vacant. A specialist unoccupied insurance policy is required.
Utilities suppliers will also charge property owners a service charge, even if no gas, electricity or water is being used in the property.
Ajay Jagota, Dlighted founder, had this to say: “Every landlord’s worst nightmare is an empty property. So many buy-to-let landlords only rent out properties to provide a modest pension or because it’s the best way of managing a family property, and they simply cannot afford to lose money month after month.
People think a deposit protects them, but it doesn’t. It puts off potential customers, and keeps properties empty – which makes it more likely that they will fall into disrepair or become magnets for antisocial behaviour. Zero deposit renting using deposit replacement insurance on the other hand keeps you and your property safe.”
At City Landlord, we can provide specialist Unoccupied Property Insurance to help you look after your investment – call us on 0800 2944 546 to find out more!